Borrowings and Other Financing Instruments

Short Term Borrowings

Short-Term Debt — NSP-Wisconsin meets its short-term liquidity requirements primarily through the issuance of commercial paper and borrowings under its credit facility.

Commercial paper outstanding for NSP-Wisconsin was as follows:



	Three Months Ended Dec. 31, 2018			Year Ended
(Amounts in Millions, Except Interest Rates)	Three Months Ended Dec. 31, 2018			2018			2017			2016
Borrowing limit	$	150		$	150		$	150		$	150
Amount outstanding at period end	51			51			11			60
Average amount outstanding	51			28			52			15
Maximum amount outstanding	103			103			129			64
Weighted average interest rate, computed on a daily basis	2.56		%	2.31		%	1.23		%	0.69		%
Weighted average interest rate at period end	2.89			2.89			1.73			0.95

Letters of Credit — NSP-Wisconsin may use letters of credit, typically with terms of one-year, to provide financial guarantees for certain operating obligations. At Dec. 31, 2018 and 2017, there were no letters of credit outstanding.

Credit Facility — NSP-Wisconsin must have a revolving credit facility in place at least equal to the amount of its commercial paper borrowing limit and cannot issue commercial paper in an aggregate amount exceeding available capacity under this credit facility. The line of credit provides short-term financing in the form of notes payable to banks, letters of credit and back-up support for commercial paper borrowings.

Features of the credit facility:



Debt-to-Total Capitalization Ratio^(a)				Amount Facility May Be Increased (millions)	Additional Periods For Which a One-Year Extension May Be Requested ^(b)
2018		2017
48	%	47	%	N/A	1


^(a)	The NSPW financial covenant requires that the debt-to-total capitalization ratio be less than or equal to 65%.


^(b)	All extension requests are subject to majority bank group approval.

The credit facility has a cross-default provision that NSP-Wisconsin will be in default on it borrowings under the facility if NSP-Wisconsin or any of its subsidiaries whose total assets exceed 15% of NSP-Wisconsin’s consolidated total assets, default on certain indebtedness in an aggregate principal amount exceeding $75 million.

If NSP-Wisconsin does not comply with the covenant, an event of default may be declared, and if not remedied, any outstanding amounts due under the facility can be declared due by the lender. As of Dec. 31, 2018, NSP-Wisconsin was in compliance with all financial covenants.

NSP-Wisconsin had the following committed credit facilities available as of Dec. 31, 2018 (in millions):



Credit Facility ^(a)		Drawn ^(b)		Available
$	150	$	51	$	99


^(a)	This credit facility matures in June 2021.


^(b)	Includes outstanding commercial paper.

All credit facility bank borrowings, outstanding letters of credit and outstanding commercial paper reduce the available capacity under the credit facility. NSP-Wisconsin had no direct advances on the facility outstanding at Dec. 31, 2018 and 2017.

Other Short-Term Borrowings — The following table presents the notes payable of Clearwater Investments, Inc., a NSP-Wisconsin subsidiary, to Xcel Energy Inc.:



(Amounts in Millions, Except Interest Rates)	Dec. 31, 2018			Dec. 31, 2017
Notes payable to affiliates	$	0.6		$	0.5
Weighted average interest rate	2.89		%	1.73		%

Long-Term Borrowings and Other Financing Instruments

Generally, all property of NSP-Wisconsin is subject to the liens of its first mortgage indentures. Debt premiums, discounts and expenses are amortized over the life of the related debt. The premiums, discounts and expenses for refinanced debt are deferred and amortized over the life of new issuance.

Long term debt obligations for NSP-Wisconsin as of Dec. 31:



(Millions of Dollars)	Maturity Range	Interest Rate Range 2018		Interest Rate Range 2017		2018			2017
Mortgage bonds	2024-2048	3.3% - 6.38%		3.3% - 6.38%		$	800		$	750
City of La Crosse resource recovery bond	2021	6.00	%	6.00	%	19			19
Other						—			2
Unamortized discount						(3		)	(3		)
Unamortized debt issuance cost						(9		)	(7		)
Current maturities						—			(151		)
Total						$	807		$	610

Maturities of long-term debt:



(Millions of Dollars)
2019	$	—
2020	—
2021	19
2022	—
2023	—

2018 financings:



Amount	Financing Instrument	Interest Rate		Maturity Date
200 million	First mortgage bonds	4.20	%	Sept. 1, 2048

2017 financings:



Amount	Financing Instrument	Interest Rate		Maturity Date
100 million	First mortgage bonds	3.75	%	Dec. 1, 2047

Deferred Financing Costs — Deferred financing costs of approximately $9 million and $7 million, net of amortization, are presented as a deduction from the carrying amount of long-term debt at Dec. 31, 2018 and 2017, respectively. NSP-Wisconsin is amortizing these financing costs over the remaining maturity periods of the related debt.

Dividend Restrictions — NSP-Wisconsin’s dividends are subject to the FERC’s jurisdiction, which prohibits the payment of dividends out of capital accounts. Dividends are solely to be paid from retained earnings.

NSP-Wisconsin’s state regulatory commission imposes the most restrictive dividend limitations.

Requirements and actuals as of Dec. 31, 2018:



Unrestricted Retained Earnings			Total Capitalization			Limit on Total Capitalization
$	11.5	million	$	1.7	billion	N/A

^(a)NSP-Wisconsin cannot pay annual dividends in excess of approximately $55 million if its average equity-to-total capitalization ratio falls below the commission authorized level.

Equity to Total
Capitalization Ratio
Required Range

Equity to Total Capitalization Ratio Actual